Lawsuit over Kingston affordable housing site

Saturday

May 24, 2014 at 2:00 AM

KINGSTON — Kingston has filed a $1 million court claim against the affordable housing complex Birchwood Village for failing to make Payment In Lieu of Taxes, or PILOT, payments, according to court documents.

James Nani

KINGSTON — Kingston has filed a $1 million court claim against the affordable housing complex Birchwood Village for failing to make Payment In Lieu of Taxes, or PILOT, payments, according to court documents.

But developer Steve Aaron, who's the face of 80-unit Birchwood Village, says assessments made by the city years ago grossly overestimated the property's assessment, leading to the row.

The housing complex serves single-parent families, veterans and those with special needs.

Aaron is currently in arbitration with the city over the assessment of the affordable and workforce-housing complex.

The suit, filed April 21, stems from back payments owed to the city from its Ulster County Industrial Development Agency contract.

The city threatens to charge a default $1 million sum, with interest, dating from April 2008, as well as other costs and fees.

Aaron said he didn't think the $1 million figure was accurate and hasn't been served with the claim.

"I don't know where it came from," Aaron said.

The tax battle with Aaron isn't new. It stems from when the city bumped up the assessment of the complex to $8 million from about $600,000.

As of 2014, that total assessment has dropped to about $4 million, according to county records.

But because the tax battle stems from a PILOT contract, Kingston Corporation Counsel Andrew Zweben said the civil summons is a prudent new step.

"We're in arbitration over the value of the property," Zweben said.

The IDA entered into the PILOT agreement with Birchwood in 2004 for its 12-building, 87,060-square-foot complex, but terminated it in 2012, citing default on payments, according to IDA records.

The situation prompted the IDA to consider changing how it issues tax breaks.

Aaron said Kingston's claim against Birchwood is likely being used as a "placeholder" in case the statute of limitation runs out on collection of the money.

Aaron struck a conciliatory tone about the tax battle.

"I'm hopeful that at the end of the day, we can get over what are minor differences," Aaron said. "We want the best resolution for Birchwood Village, the city and the investors."

Mayor Shayne Gallo's tone was less mollifying, saying Aaron "basically wants an offer where he doesn't pay interest and penalty."